Company Perspectives:

Founded in 1959 as a company specializing in the production of fine ceramic components, Kyocera has expanded its business by effectively developing and applying its ceramics technologies. The company has grown to be a world-leading manufacturer of ceramics, including custom parts and consumer products. The path we have followed demonstrates our success in developing innovative technologies and helping to set new industry standards for quality. In addition, our management philosophy reflects Kyocera's efforts to establish a harmonious relationship with the communities in which we operate. From the beginning, we have found that creating a rapport with people produces a superior result. We at Kyocera look toward a brighter future based upon a spirit of global cooperation. Acting in concert with the community, we hope to share harmony and prosperity with our friends throughout the world.

Company History:

Kyocera Corporation, founded in 1959, was one of the first companies to produce fine ceramic components. It has grown into one of the world's preeminent manufacturers of electronics, optical equipment, and other products that use sophisticated ceramics and electronics technology. Kyocera produces and sells information equipment (page printers, video conferencing systems, and peripherals); telecommunications equipment (cellular phones and "personal handyphones"); optical equipment (single-lens reflex, compact, and video cameras under the Contax, Kyocera, and Yashica brands); applied fine ceramic products (cutting tools, medical devices, photovoltaic systems, and recrystallized gemstones); fine ceramic products (components for the electronics, automotive, chemical, metal processing, textile manufacturing, and other industries); semiconductor parts (packages, circuit boards, and other components used in advanced semiconductor devices); and electronic components (capacitors, connectors, sophisticated hybrid devices, and other components, through the AVX and Elco subsidiaries). These products, many of which are manufactured outside of Japan, are sold around the world by the company's own sales force, as well as through a comprehensive network of distributors and dealers.

Although over the years Kyocera has been known more for its individualistic spirit than for a typical Japanese communal character, the company's corporate culture reflects a standard Japanese dedication to the manufacture of superior products. This philosophy was established and carefully cultivated by the company's entrepreneurial founder and chairman, Kazuo Inamori, who retired in mid-1997 to become a Zen Buddhist monk.

Early History

Upon graduation from Kagoshima University, where he studied applied chemistry, Inamori went to work as a ceramics engineer. When he was asked by his employer in 1959 to transfer to Pakistan and become the manager of an insulator factory, Inamori chose instead to take advantage of an opportunity offered by an outside investor to start his own company.

Kyoto Ceramic Co., Ltd. benefited from creative research ideas and methods that produced discoveries as much through accident as through pure scientific method. For example, during the development of an insulator made of magnesium oxide, a very dry, loose powder, the challenge facing the ceramics industry was to find a way to hold the magnesium oxide together during firing, a problem that leading researchers around the world had been unable to solve.

When Inamori accidentally tripped over a block of paraffin wax as he walked across the lab, it struck him as he removed the wax that had stuck to his shoes that the wax might hold the key to the magnesium oxide problem. Inamori successfully mixed the magnesium oxide and the wax together using what is now humorously referred to in company annals as the "Inamori fried rice powder molding method."

From the very beginning, Inamori instilled a corporate philosophy that emphasized product excellence. To ensure the company's ability to grow without incurring further debt, since Inamori found debt unacceptable, all efforts were directed toward paying off the debt from the company's start-up. The pressure of meeting such ambitious objectives often required salespeople, production staff, and development personnel to work around the clock to fulfill product orders before deadlines.

In 1969, ten years after Kyoto Ceramic's birth, Kyocera International, Inc. was established as a sales company in the United States. Only two years later, this subsidiary entered into an agreement with Fairchild Camera and Instrument of San Diego, California to acquire one of its factories to make ceramic components. On the other side of the ocean, Feldmühle Kyocera Elektronische Bauelemente GmbH was established in the same year as a joint venture with Feldmühle AG of West Germany for manufacturing semiconductor packages and electronic components.

Grew Rapidly During the Late 1970s

The late 1970s were a time of intense growth and expansion for Kyoto Ceramic both inside and outside Japan. In 1977 it established Crescent Vert Company, Ltd. to manufacture recrystallized jewels and Kyocera (Hong Kong) Ltd. to supply electronic components and equipment to Southeast Asia. American Feldmühle Corporation and Cybernet Electronics Corporation became affiliates in 1979.

The acquisition of Cybernet, a Japanese manufacturer of citizens-band radios and audio equipment, was stimulated to a large extent by Inamori's desire to expand the company's base of business beyond ceramic packaging. Unfortunately, the merger created intense and conflicting company loyalties among the labor union workers inherited from Cybernet and hampered, for a time, the smooth transition Inamori sought.

Reorganized and Pursued Acquisitions in the Early and Mid-1980s

The Kagoshima Central Research Laboratory was opened in 1979 to engage in fine ceramics research, particularly in the areas of applied and processing technologies. In 1984 Kyocera established its second research facility in Tokyo to study the areas of electronics, opto-electronics, and other new media. Meanwhile, in 1982, Kyocera Corporation was founded by merging five subsidiaries, including the original Kyoto Ceramic.

In 1984 Inamori formed a private telecommunications company called Daini-Denden Kikaku Company, Ltd. (later known as DDI Corporation) to enter into competition with Nippon Telegraph and Telephone (NTT). Funded by Inamori and 24 other institutional investors, this venture, NTT's first competitor, was launched in part in retaliation for NTT's successfully blocking an attempt by Kyocera to market its own line of cordless telephones in Japan the year before. NTT had been the only legal supplier. When Kyocera shipped 30,000 of its own units, rated superior to NTT's, NTT lodged an immediate complaint with Japan's Ministry of Ports & Telecommunications and forced Kyocera to recall its product. Subsequently, Daini-Denden, with Inamori as its chairman, rapidly expanded its business by adding public telecommunications services to its private network and by establishing subsidiaries to institute cellular mobile telephone services in several regions of Japan.

Subsidiary development continued in both North America and Europe during 1985 and 1986, culminating in the 1987 formation of Kyocera America, Inc. and Kyocera Electronics, Inc. to take over for Kyocera International, which became a holding company for seven other U.S. affiliates.

Following a 1983 merger that made Yashica Co., Ltd. a Kyocera subsidiary, Yashica in 1987 successfully introduced the Samurai SLR camera, a breakthrough product integrating advanced technology, ease of use, and reasonable cost. Also in 1987 Kyocera Mexicana, S.A. de C.V. was incorporated, bringing the number of Kyocera's overseas manufacturing facilities to six.

Kyocera's growth was not free of setbacks. Many resulted from its chairman's continued resistance to the unspoken tenets of Japanese commerce as, for instance, his duel with NTT in 1984 shows. The following year, Inamori was criticized in the press for ignoring government exportation regulations and directly selling components to a leading U.S. defense manufacturer. A 1980 incident in which Kyocera began marketing a bioceramic medical implant prior to obtaining the official approval of Japan's Ministry of Health returned to haunt Inamori in 1985 when the company was accused of illegal activities by a member of Japan's parliament. Inamori was often a target of the Japanese press, which questioned both his strict managerial style and his judgment in doing such things as establishing a company cemetery.

Kyocera's partnership with the California-based LaPine Technology was another deal that brought bad press. In 1986 Kyocera invested more than $10 million to fund the manufacture of 3.5-inch hard disk drives for the Silicon Valley company. This arrangement enabled LaPine to obtain the necessary financing it sought from the Prudential-Bache Trade Corporation. Within months, however, the three-way partnership began to crumble, reducing all three companies to arguments over costs and shipment quantities. As this battle wore on, LaPine customers transferred their orders to other suppliers and employees were laid off in substantial numbers. In the end, Kyocera and Prudential-Bache squared off to fight over what little was left.

Nonetheless, Kyocera has been an active participant in its local and national community. The Inamori Foundation, established in 1984, awards the Kyoto Prize annually for achievements in science, technology, the creative arts, and the humanities. The foundation also funds a number of domestic research projects throughout Japan in a range of technological and cultural specialities.

Made Major Acquisitions in 1989 and 1990

During the late 1980s and early 1990s, Kyocera made major moves to bolster its overseas operations, particularly in Europe and North America. In 1988 a company reorganization set up head offices in Asia, the United States, and Europe, the latter of which--Kyocera Europe GmbH--was based in Germany. The following year the company spent US $250 million to acquire Elco Corporation, a maker of electrical connectors based in the United States, which had annual sales of US $152 million and operated two plants in Europe. This particular purchase did not go smoothly at first, as Elco soon lost most of its upper managers, who left after disagreements developed between them and Inamori.

Kyocera's 1991 US $560 million acquisition of AVX Corporation, on the other hand, went swimmingly. AVX, based in South Carolina and with six factories in Europe, manufactured multilayered ceramic and tantalum capacitors used in semiconductors, a perfect fit with Kyocera. Following the acquisition, Kyocera helped AVX cut costs and AVX also benefited from the two companies together being able to offer their customers a full range of electronics components. As a result, AVX revenues jumped from about US $350 million in 1989 to about US $1.2 billion in 1995; profits increased fourfold to about US $130 million. In August 1995 Kyocera sold about 25 percent of AVX in an initial public offering, gaining a profit of more than US $300 million in the process.

1990s and Beyond

By 1993 DDI had grown rapidly, with sales reaching an estimated US $3 billion, and was the clear number two telephone company in Japan. That year, DDI went public, after which Kyocera owned a 25 percent stake in it. Kyocera continued to expand its involvement in telecommunications, as evidenced by the 1995 debut in Japan of the personal handyphone system (PHS), a different type of cellular phone system, one that worked within a smaller area than that of cellular systems and that cost about one-fifth as much as cellular.

Kyocera expanded into multimedia in 1995, with the establishment in August of Kyocera Multimedia Corporation for the marketing via television of software for games, database information, and consumer products. The company also made a series of moves to pursue the burgeoning economy of China. In December 1995 Shanghai Kyocera Electronics Co., Ltd. was established to manufacture electronic components. The following year Kyocera entered into a joint venture with a Chinese company to form Dongguan Shilong Kyocera Optics Co., Ltd., which would manufacture and sell in China consumer optical instruments, such as cameras, lenses, and stroboscopes.

Although still largely an unknown entity, Kyocera Corporation in a span of less than 40 years had developed leading operations in a wide range of cutting-edge high-tech areas. By fiscal 1997 the company's largest sector in terms of sales was information and telecommunications equipment, which accounted for 30.9 percent of the total. Electronic components comprised 29.1 percent, semiconductor parts, 19.7 percent; optical equipment, seven percent; fine ceramic products, 6.8 percent; and applied fine ceramic products, 5.9 percent. Kyocera was also increasingly global in nature and, in particular, planned to target the fast-emerging countries of Asia for future growth. The Kyocera of the late 1990s and beyond, however, would no longer feature the revered entrepreneur, Kazuo Inamori, who retired in June 1997, becoming a Zen Buddhist monk in the Kyoto temple where he had years earlier set up the controversial tomb for Kyocera employees.